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1) Given the following data:
Return on investment (ROI) would be:
A.5%
B.12%
C.25%
D.60%
2) Qart Corporation uses the FIFO method in its process costing system. Operating data
for the Cutting Department for the month of March appear below:
According to the company's records, the conversion cost in beginning work in process
inventory was $1,656 at the beginning of March. Additional conversion costs of
$129,960 were incurred in the department during the month.
The cost per equivalent unit for conversion costs for March is closest to:
A.$1.710
B.$1.677
C.$1.756
D.$1.840
3) Nickolls Corporation manufactures and sells one product. The following information
pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 30,000 units and sold 27,000 units. The company's only product is sold for
$230 per unit.
The net operating income for the year under super-variable costing is:
A.$78,000
B.$594,000
C.$351,000
D.$405,000
4) The standards for direct materials in making a certain product are 20 pounds at $0.75
per pound. During the past period, 56,000 units of product were made and the materials
quantity variance was $30,000 U. The number of pounds of direct material used during
the period amounted to:
A.1,080,000
B.1,160,000
C.1,200,000
D.784,000
5) A cement manufacturer has supplied the following data:
What is the company's unit contribution margin?
A.$4.20 per unit
B.$0.45 per unit
C.$1.90 per unit
D.$2.10 per unit
6) Wienecke Corporation manufactures and sells one product. The following
information pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 44,000 units and sold 41,000 units. The company's only product is sold for
$239 per unit.
Assume that the company uses an absorption costing system that assigns $16 of direct
labor cost and $70 of fixed manufacturing overhead to each unit that is produced. The
unit product cost under this costing system is:
A.$88 per unit
B.$213 per unit
C.$174 per unit
D.$104 per unit
7) How many minutes of milling machine time would be required to satisfy demand for
all four products?
A) 22,600
B) 23,700
C) 18,400
D) 9,000
8) The Hudson Block Company has a trucking department that delivers crushed stone
from the company's quarry to its two cement block production facilities--the West Plant
and the East Plant. Budgeted costs for the trucking department are $340,000 per year in
fixed costs and $0.30 per ton variable cost. Last year, 70,000 tons of crushed stone were
budgeted to be delivered to the West Plant and 100,000 tons of crushed stone to the East
Plant. During the year, the trucking department actually delivered 75,000 tons of
crushed stone to the West Plant and 90,000 tons to the East Plant. Its actual costs for the
year were $65,000 variable and $350,000 fixed. The level of budgeted fixed costs is
determined by peak-period requirements. The West Plant requires 40% of the
peak-period capacity and the East Plant requires 60%. The company allocates fixed and
variable costs separately.
For performance evaluation purposes, how much variable trucking department cost
should be charged to the West Plant at the end of the year?
A.$22,500
B.$24,000
C.$21,000
D.$32,000
9) Mcallister Corporation has provided the following data concerning its only product:
What is the margin of safety in dollars?
A.$1,256,850
B.$4,728,150
C.$3,990,000
D.$5,985,000
10) Romasanta Corporation manufactures a single product. The following data pertain
to the company's operations over the last two years:
What was the absorption costing net operating income last year?
A.$53,600
B.$50,000
C.$57,200
D.$50,300
11) Which of the following would most likely be included as part of manufacturing
overhead in the production of a wooden table?
A) The amount paid to the individual who stains the table.
B) The commission paid to the salesperson who sold the table.
C) The cost of glue used in the table.
D) The cost of the wood used in the table.
12) The net present value of the entire project is closest to:
A.$110,500
B.$35,669
C.$84,460
D.$41,389
13) Sorrow Kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. During November, the kennel budgeted
for 2,300 tenant-days, but its actual level of activity was 2,350 tenant-days. The kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for November:
Data used in budgeting:
Actual results for November:
The activity variance for net operating income in November would be closest to:
A.$1,520 U
B.$590 F
C.$1,520 F
D.$590 U
14) Tabeling Corporation manufactures and sells a single product. The company uses
units as the measure of activity in its budgets and performance reports. During August,
the company budgeted for 6,500 units, but its actual level of activity was 6,540 units.
The company has provided the following data concerning the formulas used in its
budgeting and its actual results for August:
Data used in budgeting:
Actual results for August:
The overall revenue and spending variance (i.e., the variance for net operating income
in the revenue and spending variance column on the flexible budget performance
report) for August would be closest to:
A.$10,362 F
B.$10,362 U
C.$10,970 F
D.$10,970 U
15) The DVD Division of Sound Company makes and sells compact DVD players
(DVDP) that it presently sells to outside customers. Budgeted costs next month for the
DVD Division are as follows:
MaxiSound, another division of Sound Company, would like to buy 1,000 of the
DVDPs from the DVD Division. An outside supplier has offered to sell similar DVDPs
to MaxiSound for $170 each.
Assume that DVD Division's monthly production capacity is 2,800 units. If the DVD
Division sells 1,000 DVDPs to MaxiSound for $170 each, the monthly effect on the
profits of DVD Division will be a:
A.$15,000 decrease
B.$42,000 decrease
C.$50,000 increase
D.no change
16) At what purchase price for the wheels would Talbot be indifferent between making
or buying the wheels?
A.$1.70 per wheel
B.$1.60 per wheel
C.$1.55 per wheel
D.$1.15 per wheel
17) Sagon Corporation manufactures and sells one product. The following information
pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 29,000 units and sold 23,000 units. The company's only product is sold for
$231 per unit.
The company is considering using either super-variable costing or an absorption costing
system that assigns $25 of direct labor cost and $56 of fixed manufacturing overhead to
each unit that is produced. Which of the following statements is true regarding the net
operating income in the first year?
A.Super-variable costing net operating income exceeds absorption costing net operating
income by $486,000.
B.Absorption costing net operating income exceeds super-variable costing net operating
income by $336,000.
C.Absorption costing net operating income exceeds super-variable costing net operating
income by $486,000.
D.Super-variable costing net operating income exceeds absorption costing net operating
income by $336,000.
18) The management of Lantieri Corporation is reviewing its policies concerning
compensation of salespersons. The company has four products that use the same
constrained resource. Data concerning those products appear below:
The company does not have enough of the constrained resource to satisfy for demand of
all four products.
Required:
a. If salespersons are paid commissions that are a set percentage of sales, which product
would they prefer to sell? In other words, if it is a choice between selling one unit of
one product and one unit of another, which product would they prefer to sell?
b. From the standpoint of the entire company, if it is a choice between sales of one unit
of one product versus another, which product should the salespersons emphasize?
19) Schepp Corporation has provided the following financial data:
20) In computing its predetermined overhead rate, Brady Company included its factory
insurance cost twice. This error will result in:
A.the ending balance of Finished Goods to be understated.
B.the credits to the Manufacturing Overhead account to be understated.
C.the Cost of Goods Manufactured to be overstated.
